CAW needs to be 'more flexible,' expert warns

Canadian Auto Workers president Ken Lewenza takes questions from the media following a meeting to discuss contracts with General Motors in Toronto, the first of a series of meetings with the big three automakers. (Michelle Siu/Canadian Press)

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With Canada's auto industry on the rebound, it should come as no surprise that auto workers, having had to make concessions years ago, are now asking for a share of the profits as they begin contract negotiations with the big three Detroit automakers.

But with observers predicting tough negotiations ahead, at least one analyst says that the contract that is eventually negotiated will go a long way in determining the future of the auto industry.

"I think if the CAW pushes too hard, we're going to see no new investment in Ontario from the Detroit 3," University of Windsor professor and auto industry expert Tony Faria told CBC News. "If they can work out a deal that is more satisfactory to both sides then I think there's a chance we can get investment here and retain, and maybe grow some jobs."

The Canadian Auto Workers union is looking for a guaranteed increase in wages and cost of living allowances over the life of the contract. The companies want the union to accept the same deal their counterparts in the U.S. received — no pay rate or cost of living increase. Instead, the Detroit 3 want the union to agree to profit sharing, meaning their increase in pay for that year would depend on the automaker's profits.

Autoworkers at the top of the pay scale get around $34 an hour — $40 if benefits are included.

"I think the CAW has got to be more flexible in their negotiations," Faria said. "They've got to think more in terms of what they need to do to retain jobs in Canada."

The union made a number of concessions, including to wages, vacation time and cost-of-living payments, to help the ailing automakers during the 2008-09 recession.

"We won't be overzealous," CAW national president Ken Lewenza said Tuesday. "We aren't going in there demanding everything back from 2009. We're just saying that we have to find a way to share in the successes that our members have built over many years."

A recent report from the Conference Board of Canada noted that the "recovery of the auto industry is in full swing" and that automakers can expect "stellar growth in their revenues," which are set to increase by 17.7 per cent this year and 9.8 per cent in 2013. This will translate to pre-tax profits of $1.5 billion in 2012— the highest level since 2002, the report said.

"The companies have learned to make money even at low volumes. Workers' sacrifices have been a big part of that success," Lewenza said.

Dimitry Anastakis, an associate professor at Ontario's Trent University who researches North America's role in the auto industry, said the CAW faced severe cut backs and members deserve their fair share.

"I certainly don’t think they should take a further haircut. They’ve done their share and whether you philosophically believe in unions or not, these are people who have taken concessions and the companies are doing a lot better in part because they made those concessions," Anastakis said.

Anastakis added that the Canadian and Ontario governments bailed out those companies partially on the premise that they continue to build in the country.

"The problems the companies faced are largely not of the union’s making," Anastakis said. "GM, Ford and Chrysler have brought much of the problems they face upon themselves , not because they’re unionized, because they’ve made bad management decisions in terms of products, in terms of dependency on big vehicles, in terms of quality questions.

"We have to be fair here … they have taken quite a bit of concessions."

But Faria suggested the CAW has been short-sighted in its past negotiations and the problem is that Canada has become one, if not the highest, automotive labour cost country in the world.

Automotive jobs are going to other countries, including the U.S, where the common factor is low labour costs, Faria said.

"The fact is it would be nice to have the workers earn as much money as they can but there has to first be a job before anyone can earn any money, period. That's the issue," Faria said.

He said the UAW has been "far more flexible" than the CAW in negotiations.

"They've taken as their number 1 objective 'create jobs' and secondly, worry about what the pay scale is. And I think they've done a much better job than the CAW has."

For example, in Canada, since 2000, there have been five assembly plants closed and only one built, Faria said.

He added that GM, Ford and Chrysler are projected to build 600,000 fewer vehicles in Canada in 2016 than 2011.

"Canada needs to bring its labour costs more in line with the U.S and if the CAW continues to insist on yearly pay scale increases and on top of that cost of living allowances, the cost of labour in Canada will continue to get higher than in the U.S. And that's seriously going to hurt investment in new facilities in Canada."